Johnson & Johnson is looking to get the oral, once-daily
candidate approved for the treatment of adult type II diabetes
patients. Although the FDA is not required to follow the panel's
advice, it usually does so. With the canagliflozin new drug
application (NDA) being submitted in May 2012, a response from
the FDA should be out by late Mar 2013.

FDA approval would make canagliflozin the first sodium glucose
co-transporter 2 (SGLT-2) inhibitor to gain approval in the
US.

Other SGLT-2 Inhibitors in Development

We note that Johnson & Johnson is not the only company
looking to develop a SGLT-2 inhibitor.
Bristol-Myers Squibb
(
BMY
) and
AstraZeneca's
(
AZN
) oral SGLT-2 inhibitor, Forxiga, gained EU approval in Nov 2012.
However, Forxiga is yet to gain approval in the US. The
companies, which received a complete response letter from the FDA
for Forxiga, intend to resubmit their marketing application in
mid-2013.

Meanwhile,
Eli Lilly
(
LLY
) and Boehringer Ingelheim recently announced positive top-line
results on their SGLT-2 inhibitor, empagliflozin, from four phase
III trials are developing empagliflozin. The companies intend to
seek approval for empagliflozin in the US, Europe and Japan this
year.

We currently have a Neutral recommendation on Johnson &
Johnson, which carries a Zacks Rank #2 (Buy). While we expect
Johnson & Johnson to continue facing headwinds in the form of
pricing pressure, currency fluctuation, manufacturing issues and
healthcare reform, we believe the company's diversified business
model, lack of cyclicality, and strong financial position will
continue helping it pave its way through tough situations.

Other large-cap pharma stocks that currently carry a Zacks
Rank #2 include Eli Lilly and
Novartis
(
NVS
).